Construction outlook: poll of industry professionals

Construction professionals are bracing for heightened cost pressures over the next 12 months, as the effects of conflict in the Middle East feed through to the market.

In a poll of more than 350 professionals, conducted during our latest Construction Outlook webinar, the majority cost consultants and surveyors, more than half (51%) said they are already seeing an impact from the current geopolitical tensions on construction costs or project activity. Of these, 37% said they are seeing ‘early signs’, while 14% have already experienced a ‘clear impact’.

When asked when they expect to start seeing an impact on tender prices in UK construction specifically, almost all respondents said they have either already seen an impact (28%), or anticipate seeing one within the next three months (50%) or within three to six months (21%). Just 1% expect it will take longer than six months, and only 1% aren’t expecting any impact on tender prices.

Dr David Crosthwaite, chief economist at BCIS, said: ‘According to almost one-third of the professionals we polled, geopolitical risk is already feeding into construction pricing. Given the lag in official data, these early signals from industry are helpful for understanding how cost pressures are evolving in real time.

‘What we heard from the respondents aligns with our expectations, with suggestions that contractors are more cautious about committing to fixed prices. In some cases, they are reportedly shortening the period they are prepared to hold quotes for and looking to reintroduce fluctuation mechanisms to manage uncertainty.’

Input cost expectations remain elevated

Looking at input costs over the next 12 months, 95% of professionals told us they expect materials costs to rise. Just 2% said they think materials costs will stay the same, and 3% said they didn’t know.

On the labour side, a smaller majority (62%) anticipate a rise in labour costs, while 26% expect them to stay the same, and 3% predict they will fall. The remaining 9% said they didn’t know.

Dr Crosthwaite said: ‘We came into 2026 with fairly benign movement in input costs. After a period of falling materials costs between 3Q2023 and 2Q2024, annual growth in the BCIS Materials Cost Index was 2.8% in 4Q2025. Labour costs have been the more significant cost driver in recent years, with the BCIS Labour Cost Index showing 6.8% growth in the year to 4Q2025. This largely reflects wage increases catching up with the higher levels of general inflation seen in previous years.

‘The sudden disruption to the energy market caused by conflict in the Middle East is expected to place additional pressure on the sector, particularly where projects rely on energy-intensive products such as steel, cement and bricks. The big unknown, which will determine the extent to which input costs are affected, is how long the conflict lasts. A month on from the initial US and Israel air strikes on Iran, there’s no clear indication of when it will end.’

Labour pressures remain

Concerns around labour availability also persist, with lower levels of construction activity in some parts of the market likely still masking underlying shortages.

In our poll, 43% of professionals said they think labour availability will stay the same over the next year, while one-quarter said they thought it will fall, and a further 20% said they expect it to rise. 12% said they didn’t know.

Mixed workload outlook may influence pricing

Construction activity has been uneven since the pandemic. Private residential work, in particular, is taking longer to recover than expected and remains below pre-COVID levels. Overall, construction output increased by 1.8% in 2025 compared with 2024, according to the latest ONS data.

When asked about their own workload expectations for the next 12 months, 43% of professionals said they expect it to stay the same. Almost one-quarter (24%) said they expect a fall, while 17% anticipate an increase, and 16% are unsure.

Dr Crosthwaite said: ‘While workload expectations remain mixed, the outlook for costs is more consistent. We would expect these pressures to begin feeding through into official data in the coming weeks. However, increased competition for work may limit the extent to which rising costs are reflected in tender prices.’

You can access the construction outlook poll results here.

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